Traders with Bernanke blues sell off metals, gold drops $50
The slide in the spot price of gold triggered by disappointment over the Fed's actions – or lack thereof – yesterday accelerated in Thursday trade with the precious metal giving up $50 or just over 3% to trade at $1,56 an ounce shortly before the close.
The Federal Open Market Committee said on Wednesday it will be extending Operation Twist to the end of the year, but traders were disappointed by the size of the asset purchase program sending gold crashing through the psychologically important $1,600 an ounce level.
Gold bugs were hoping for a third round of quantitative easing which has been a massive boon for the yellow metal. The price of gold had almost doubled on the back of QE1 which kicked off in December 2008.
Compared to quantitative Twist – where monetary authorities sell short term bonds and buy long term bonds to 'twist' the yield curve – on the other hand is not a particularly strong instrument and essentially keeps the monetary policy in a holding pattern.
Gold is now down 17% from its all-time record high of $1,911.60 an ounce set on September 6 last year. The metal's 2012 low of $1,535 was hit mid-May.
Platinum slid 1.9% at $1,438 an ounce, palladium gave up around the same to change hands at $608 while silver was also weaker at $26.83.
Copper was trading at $3.29 a pound, down 6% since the start of the year and down more than 25% from historic highs hit at the end of July 2011.